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posted by chromas on Monday August 13 2018, @09:21PM   Printer-friendly
from the $ dept.

Musk Says 'Funding Secured' Claim Sparked by Saudi Meeting

Elon Musk said interest from Saudi Arabia's sovereign wealth fund gave him the confidence to drop the bombshell last week that he was considering taking Tesla Inc. private. The Saudi Kingdom's Public Investment Fund had approached Musk going back almost two years about taking Tesla off the market, he wrote in a blog post Monday, confirming that the fund recently bought an almost 5 percent stake. Musk described a July 31 meeting in which the Saudi fund's managing director expressed regret that Tesla hadn't moved forward with a go-private transaction.

[...] Several investors have since sued Musk and Tesla, claiming the company's share price had been manipulated. The Securities and Exchange Commission is said to be intensifying its scrutiny of the company and its chief executive officer after having started gathering general information about Tesla and Musk's earlier public pronouncements about manufacturing goals and sales targets.

One of Tesla's biggest critics, Vertical Group analyst Gordon Johnson, read Musk's blog post as a walk-back maneuver from his "funding secured" tweet last week. He cited Musk's statement Monday that the Saudi fund's support for taking Tesla private was "subject to financial and other due diligence and their internal review process for obtaining approvals." "He is specifically stating that funding is not secured, and I think that's a big deal," Johnson, whose $93 price target on Tesla shares is the lowest among Wall Street analysts, said on Bloomberg Television. "The question then becomes, what does the SEC do here, and do the shareholders stick with him?"

Also at CNBC.

Previously: Elon Musk Considers Taking Tesla Private


Original Submission

Related Stories

Elon Musk Considers Taking Tesla Private 35 comments

Elon Musk Considers Taking Tesla Private

Elon Musk Makes $82 Billion Gambit to Silence Tesla Critics

Seemingly out of the blue, Elon Musk proclaimed that he might pull his money-losing Tesla Inc. off the market. Taking the electric-car company private at the price he touted would amount to an $82 billion valuation, a monumental sum that left many investors wondering: Is this a joke?

It wasn't.

[...] "The reason for doing this is all about creating the environment for Tesla to operate best," Musk, 47, wrote Tuesday in an email to employees. He said wild swings in the carmaker's stock price are a "major distraction" to Tesla workers, who are all shareholders. And he said that being public "puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term."

To take Tesla private, Musk would have to pull off the largest leveraged buyout in history, surpassing Texas electric utility TXU's in 2007. And Tesla doesn't fit the typical profile of a company that can raise tens of billions of dollars of debt to fund such a deal.

[...] "The market doesn't believe him," said David Kudla, the CEO of Mainstay Capital Management, which is betting against Tesla. "His credibility has come into question over a number of things. If this were real, you'd expect the stock to go closer to $420 a share than it has." Most major buyouts also require a trip to the junk bond markets, where Tesla has fallen out of favor.

Tesla Shares Resume Trading, Musk Posts Blog on Why Company Should Go Private

"Tesla resumed trading on the Nasdaq exchange after a nearly two-hour pause on Tuesday afternoon, shortly after the company confirmed in a blog post that CEO Elon Musk is considering taking the electric car maker private at $420 per share."

foxbusiness.com/markets/elon-musk-fires-up-tesla-blog-to-explain-idea-of-going-private


Original Submission #1Original Submission #2

SEC Reportedly Subpoenas Tesla Over Take-Private Tweet 12 comments

Tesla Is Said to Be Subpoenaed by S.E.C. Over Elon Musk Tweet (archive)

Federal securities regulators have served Tesla with a subpoena, according to a person familiar with the investigation, increasing pressure on the electric car company as it deals with the fallout from several recent actions by its chief executive, Elon Musk.

The subpoena, from the Securities and Exchange Commission, comes days after regulators began inquiring about an Aug. 7 Twitter post by Mr. Musk, in which he said he was considering converting Tesla to a private company. In the post, he said that the financing for such a transaction, which would probably run into the tens of billions of dollars, had been "secured."

Tesla shares, a popular target for so-called short sellers who bet on certain stocks losing value, soared about 11 percent on the day Mr. Musk posted the message.

It has become clear since then that neither Mr. Musk nor Tesla had actually lined up the necessary financing aside from having preliminary conversations with some investors.

Musk tweeted[*] that he wanted to take Tesla private at $420 a share. Azealia Banks claimed[**] to have been in Musk's home and witnessed Elon Musk tweeting while using LSD and making frantic calls to shore up funding for a take-private attempt. Maybe Azealia Banks will be called to testify by the SEC?

[*] The actual tweets:

Elon Musk Reaches Settlement in SEC Tweet Battle 16 comments

Elon Musk Reaches Settlement in SEC Tweet Battle:

Elon Musk has reached a deal with the Securities and Exchange Commission, the two parties said in a legal filing on Friday. The new agreement provides much more detailed guidance about when tweets and other public statements by Musk must be approved by Tesla lawyers.

Musk's original deal with the SEC was announced last September. It required Musk to obtain pre-approval for tweets that "contain or could contain" information that's material—legal jargon for information that's significant to shareholders. While the SEC expected Musk to begin regularly clearing tweets with lawyers, Musk interpreted this language as giving him significant discretion to decide for himself which tweets contained material information. As a result, he didn't seek legal review for any tweets in the first few months the agreement was in effect.

[...]Under the new rules, Musk must get a Tesla securities lawyer's sign off on tweets (and other communications) regarding Tesla's finances, its production and delivery numbers, new lines of business, sales projections, proposed mergers, fundraising efforts, regulatory decisions, and several other types of information.

The SEC says that if the judge signs off on these new terms, the SEC will drop its request for Musk to be held in contempt. In other words, the SEC seems to be satisfied with getting Musk to start seeking legal review for his tweets the way the agency thought Musk had been doing since last time. The SEC is not seeking to punish Musk further for his February tweet.

Given how well Elon Musk followed the intent of the prior ruling, I wonder how closely he will follow this ruling?

Previously:
Funding for Tesla to Go Private Could Come From Saudis; Lawsuits and SEC Scrutiny Increase
SEC Reportedly Subpoenas Tesla Over Take-Private Tweet
Tesla Facing Criminal Probe
Elon Musk Accused by SEC of Misleading Investors in August Tweet
SEC Settlement: Elon Musk Resigns as Chairman of Tesla, Stays as CEO, $40 Million in Fines Paid
Elon Musk Isn’t on His Twitter Leash Yet, So He’s Taunting the SEC


Original Submission

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  • (Score: 0) by Anonymous Coward on Monday August 13 2018, @09:30PM (5 children)

    by Anonymous Coward on Monday August 13 2018, @09:30PM (#721128)

    Didn't this all start based on a hostile takeover rumor coming from Saudis?

    • (Score: 3, Insightful) by takyon on Monday August 13 2018, @09:33PM (4 children)

      by takyon (881) <reversethis-{gro ... s} {ta} {noykat}> on Monday August 13 2018, @09:33PM (#721131) Journal

      Rather than a hostile takeover, it could be seen as a willing embrace.

      --
      [SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
      • (Score: 2) by Fluffeh on Monday August 13 2018, @10:07PM (3 children)

        by Fluffeh (954) Subscriber Badge on Monday August 13 2018, @10:07PM (#721147) Journal

        It's a smart move for the Saudis - ween off oil economy, get a head start on the oil-killer. I do wonder how it will go with US regulators. Many countries have some very specific rules about external interests and owning massive/important companies.

        • (Score: 2) by bob_super on Monday August 13 2018, @10:32PM

          by bob_super (1357) on Monday August 13 2018, @10:32PM (#721155)

          The US is very picky about external takeovers, but the Saudi are our Best Buddies, so that would be fine.
          ... Except that traditional car makers will freak out at the amount of money suddenly becoming available to Tesla, and invite every lawyer they can find to read the anti-muslim anti-SA terror laws passed after 9/11, to try to get their many congresscritters to kill the deal and potentially Tesla in the process.

        • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @12:59AM

          by Anonymous Coward on Tuesday August 14 2018, @12:59AM (#721195)

          It's a smart move if Tesla's value increases. $420 per share for a company that is on the ropes is not cheap.

        • (Score: 2) by Bot on Tuesday August 14 2018, @08:07AM

          by Bot (3902) on Tuesday August 14 2018, @08:07AM (#721277) Journal

          >It's a smart move for the saudis indeed
          Embrace extend (price, not mileage or efficiency) and extinguish.

          --
          Account abandoned.
  • (Score: 0) by Anonymous Coward on Monday August 13 2018, @09:36PM (13 children)

    by Anonymous Coward on Monday August 13 2018, @09:36PM (#721132)

    Who exactly is suing? If it is investors, why? the value went up? really?

    If it is shorts, who gives a &*@#?

    Seriously, Shorts!=Investors with respect to the stock they shorted . . .

    • (Score: 3, Funny) by Anonymous Coward on Monday August 13 2018, @09:51PM

      by Anonymous Coward on Monday August 13 2018, @09:51PM (#721138)

      "Eat my shorts!"

    • (Score: 2) by aiwarrior on Monday August 13 2018, @09:57PM (11 children)

      by aiwarrior (1812) on Monday August 13 2018, @09:57PM (#721140) Journal

      This!
      Shorters are on derivatives markets, meaning they are for good and bad out of SEC rules. SEC rules also impose a lot of rules on investors, that derivatives investors do not need to abide to. To be honest the derivative options people need to take it as part of life.

      • (Score: 0) by Anonymous Coward on Monday August 13 2018, @10:10PM (9 children)

        by Anonymous Coward on Monday August 13 2018, @10:10PM (#721150)

        "Shorters are on derivatives markets"

        What does this mean? You mean if I go to fidelity and short sell a stock I am "on derivatives markets"?

        • (Score: 5, Informative) by Anonymous Coward on Tuesday August 14 2018, @12:26AM (8 children)

          by Anonymous Coward on Tuesday August 14 2018, @12:26AM (#721183)

          "derivatives" are standardized contracts. When you short, you buy the right to sell somebody elses stock, you're not actually selling stock you own. Because they aren't your shares, you don't have a contractual relationship with the issuer. In this case Tesla. Because Tesla didn't sell you anything, or promise you anything, there is no "consideration". Which is to say, that Tesla has sod all to do with whatever you bought.

          Manufacturing companies are extremely cash intensive. Corporate raiders often attempt to crash these companies. They take them over, loot the cash in the form of CEO bonus's, and then dump secured debt in place of the cash. The problem with that, is that long term manufacturing cycles are effected by highly variable market factors, like inflation, consumer demand, interest rates etc. The reason they keep cash on hand is to weather these cycles. So what happens is the company is weakened by the takeover and limps along until it ultimately goes bankrupt years later. The corporate raiders get new jets, and the children whose fathers work at companies like Tesla, starve.

          There are many kinds of derivatives. Derivatives are highly speculative, and can create market wide dynamics that are extremely dangerous, or otherwise can be outright fraudulent. The 2008 market crash was caused by insurance based derivatives, that were actually illegal under Glass Steigall. But Glass Steigal was repealed during the Monica Lewinski scandal. (probably as part of a deal with a Republican congress to avoid impeachment) Incidentally this dynamic will happen again, because Glass Steigall was never reinstated.

          There aren't a lot of folks who understand SEC law. And 99% of journalists writing about this, don't have the faintest clue what they are talking about. Even worse a lot of them are just echoing professional astroturfing, which IS actually illegal when it comes to manipulating market shares. So most of the related articles, are written by unwitting dupes in a criminal conspiracy.

          What is actually more interesting, is that if this goes to court, it will open up discovery for Musk. Which is to say he will have an opportunity, and legal basis for sussing out who the players are, and naming them and shaming them in front of a judge and jury. So if they want to sue him, go ahead. I'm sure he would just hate to be thrown in that briar patch. Who knows what charges will be levied after such a circumstance?

          • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @01:50AM (5 children)

            by Anonymous Coward on Tuesday August 14 2018, @01:50AM (#721204)

            What's with this new pattern of people posting multi paragraph responses that fail to answer the question or otherwise go on a tangent?

            • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @02:17AM (3 children)

              by Anonymous Coward on Tuesday August 14 2018, @02:17AM (#721206)

              '"derivatives" are standardized contracts. When you short, you buy the right to sell somebody elses stock, you're not actually selling stock you own.'

              • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @04:01AM (2 children)

                by Anonymous Coward on Tuesday August 14 2018, @04:01AM (#721231)

                You mean if I go to fidelity and short sell a stock I am "on derivatives markets"?

                • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @05:30PM (1 child)

                  by Anonymous Coward on Tuesday August 14 2018, @05:30PM (#721440)

                  Sometimes the nomenclature "short" is used to refer to just selling a stock you own. Which is different than selling a stock you don't own. If you short a stock you don't own, you are buying a contract, which is a derivative. Derivatives are sold on various markets just like stocks, and your broker will provide them mostly transparently. Typically the first time you do this, your broker will be pretty explicit about showing you the risks.

                  It is important to distinguish between them. When the big banks defrauded the world economy, the way they did it was buying derivatives into consumer mutual funds they managed. Essentially they pushed fraudulent unpayable insurance claims into unwitting consumers retirement portfolios without their knowledge or consent, and then crashed the insurer so the claims could never be paid. The money John Q. Public paid into their mutual funds went into bankers bonus's, and George W. Bush may as well have underwrote the whole thing, because the SEC never prosecuted most of them.

                  • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @09:41PM

                    by Anonymous Coward on Tuesday August 14 2018, @09:41PM (#721550)

                    Sometimes the nomenclature "short" is used to refer to just selling a stock you own.

                    Wow still not talking about actually just selling short a stock. Not selling a stock, not options, not futures, just short selling. It seems you have no idea what you are talking about and just keep trying to push some political point.

            • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @03:37AM

              by Anonymous Coward on Tuesday August 14 2018, @03:37AM (#721221)

              Hey!...SN is now all AC---all the time. Any AC can say anything no matter if it is a real fact or an alternate fact. Me thinks we need a "nuke" mod. Blast the infringing IP back into the "Dark Web".

          • (Score: 1) by khallow on Tuesday August 14 2018, @09:50AM

            by khallow (3766) Subscriber Badge on Tuesday August 14 2018, @09:50AM (#721303) Journal

            When you short, you buy the right to sell somebody elses stock, you're not actually selling stock you own.

            The answer is in the word "derivative".

            (of a product) having a value deriving from an underlying variable asset.

            A derivative is a security with a value explicitly derived from other assets. Shorting is not a derivative as a result. It's simply selling stuff you don't have.

          • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @11:34AM

            by Anonymous Coward on Tuesday August 14 2018, @11:34AM (#721329)

            I can't believe this got upvoted to +5, its the level of fake news we expect from the MSM. The deep state bots were out in force yesterday.

      • (Score: 2, Interesting) by Anonymous Coward on Monday August 13 2018, @10:14PM

        by Anonymous Coward on Monday August 13 2018, @10:14PM (#721151)

        According to this, the SEC does regulate "shorters":

        Regulation SHO is a regulation implemented on January 3, 2005, that seeks to update legislation concerning short sale practices.
        [...]
        The intent of the rule, according to the SEC, is to prevent short selling that, in particular, is meant to be abusive or manipulative of the securities share price.

        https://www.investopedia.com/terms/r/regsho.asp [investopedia.com]

  • (Score: 3, Interesting) by Anonymous Coward on Monday August 13 2018, @10:45PM (12 children)

    by Anonymous Coward on Monday August 13 2018, @10:45PM (#721156)

    Investors have to be Saudis because Americans don't have any money. The Boomers are busy spending their pensions on luxuries as fast as they can before they die. GenXers are slaving from paycheck to paycheck. Millennials are starving while they drive Ubers for negative net income. Homelanders are stuck in the basement with social media and video games since they can't afford to go anywhere.

    When the Boomers die they will bury their vast fortunes in their tombs, bankrupting America for good.

    • (Score: 1, Insightful) by Anonymous Coward on Monday August 13 2018, @11:00PM (6 children)

      by Anonymous Coward on Monday August 13 2018, @11:00PM (#721161)

      Thanks conservatives for sucking the big dong of oil execs! Is the runoff trickling down and making you feel better?

      Fuckers tanked the country out of hate, fear, and greed. THANKS A LOT!

      • (Score: 0, Troll) by Anonymous Coward on Monday August 13 2018, @11:22PM (4 children)

        by Anonymous Coward on Monday August 13 2018, @11:22PM (#721168)

        In America, conservatives are people who want the Founders' ideal: A small, explicitly limited government whose sole purpose is to protect each individual's rights.

        Whoever is responsible for the downfall, it's not the conservatives.

        • (Score: 1, Insightful) by Anonymous Coward on Tuesday August 14 2018, @03:26AM (2 children)

          by Anonymous Coward on Tuesday August 14 2018, @03:26AM (#721218)

          Sorry bud, that might have been the ideal but it sure isnt the practice. Like liberals who are ok with mass surveillance or who think weed is evil. They arent 100% liberals.

          So ya, i reiterate, conservstives tanked this country and the dems followed suit to try and win with a more centrist position. We are now in corporatocracy and we need to flip this wagon around before the next generation thinks this shit is normal.

          • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @08:56AM (1 child)

            by Anonymous Coward on Tuesday August 14 2018, @08:56AM (#721288)

            we need to flip this wagon around before the next generation thinks this shit is normal.

            You mean it isn't yet? The US has been run by corporations since at least the '80s. Between big oil, the military industry, the MAFIAA or the banks, I don't see any occasion in my lifetime that the US was ruled "by the people, for the people".

            • (Score: 4, Insightful) by c0lo on Tuesday August 14 2018, @01:09PM

              by c0lo (156) Subscriber Badge on Tuesday August 14 2018, @01:09PM (#721344) Journal

              I don't see any occasion in my lifetime that the US was ruled "by the people, for the people"

              But it is... for certain values of people.

              --
              https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
        • (Score: 2) by cmdrklarg on Tuesday August 14 2018, @04:05PM

          by cmdrklarg (5048) Subscriber Badge on Tuesday August 14 2018, @04:05PM (#721407)

          The problem has very little to do which part of the political spectrum you reside in. It has everything to do with the rich and powerful using their money to influence politicians to have them do their bidding.

          And I'll give you one guess on which side of the political spectrum is doing everything they can to cater to the rich and powerful. Who was it that just passed massive, permanent tax cuts for the rich? That was Obama, right?

          --
          The world is full of kings and queens who blind your eyes and steal your dreams.
      • (Score: 2) by LoRdTAW on Tuesday August 14 2018, @01:28PM

        by LoRdTAW (3755) on Tuesday August 14 2018, @01:28PM (#721350) Journal

        Fuckers tanked the country out of greed using hate and fear. THANKS A LOT!

        FTFY.

    • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @12:13AM (3 children)

      by Anonymous Coward on Tuesday August 14 2018, @12:13AM (#721179)

      What's wrong with Mr. Putin? After all, he never bombed the US like Saudis; not yet anyway.

      • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @03:46AM (2 children)

        by Anonymous Coward on Tuesday August 14 2018, @03:46AM (#721225)

        Maybe not, but he did hack our interwebby to fuck with our minds.

        • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @04:50AM (1 child)

          by Anonymous Coward on Tuesday August 14 2018, @04:50AM (#721244)
          Perhaps a payback for decades of VOA, BBC, Radio Svoboda (and others) shortwave broadcasts into USSR with explicit goal to mess with minds of the soviet people?
          • (Score: 4, Informative) by c0lo on Tuesday August 14 2018, @05:16AM

            by c0lo (156) Subscriber Badge on Tuesday August 14 2018, @05:16AM (#721247) Journal

            Don't need to go that far back. 1996 and the re-election of Yeltsin [latimes.com] would suffice.

            Although the Americans spoke no Russian and worked through translators, they began secretly laying out an American-style campaign to counter the public sentiment running against Yeltsin.

            When they started, Yeltsin's approval rating was about 6%, and, as they told Time magazine, Josef Stalin had a higher positive rating in their polls. Yet last week, Yeltsin defeated Communist candidate Gennady A. Zyuganov by more than 13 percentage points.

            One of the results? The raise of the Russian oligarchs [npr.org] which some of them are now subject of US travel ban.

            (not in my intention to pass a value judgement here, just pointing out that interventionism is not necessary a thing of the distant past)

            --
            https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
    • (Score: 0) by Anonymous Coward on Tuesday August 14 2018, @03:42AM

      by Anonymous Coward on Tuesday August 14 2018, @03:42AM (#721224)

      Well you don't see Mr. Gates or the Mr. Koch's nor Mr. Buffet Buying into Tesla. They are all sitting on the sidelines waiting to see how things shake out.

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